AT&T's 700 MHz Play Continues to Draw Scrutiny

WASHINGTON—AT&T’s bid to acquire the spectrum of another 700 MHz auction winner remains the subject of debate. The Federal Communications Commission extended its pleading cycle for the proposed deal between AT&T and Kaplan Telephone Co., one of the Competitive Local Exchange Carriers that won licenses in the 2008 auction of TV channels 52-69, otherwise known as the 700 MHz auction.

Petitions to deny FCC approval are now due Nov. 26 versus Oct. 30. The deadlines for oppositions and replies have likewise been extended by roughly a month to Dec. 8 and 15 respectively.

Opposition arose recently when Sprint, T-Mobile and a collection of other interested parties caught onto several 700 MHz license transfer applications filed by AT&T, including the Kaplan application. Opponents say the transfers will give AT&T control of an inordinate amount of low-band cellular spectrum, according to FierceWireless. Low-band or sub-1 GHz spectrum is highly prized among wireless providers for its propagation characteristics.

“As our competitors well know, arming T-Mobile with low-band spectrum is a competitive game-changer, enabling our service to penetrate building walls better and travel longer distances than we can with the spectrum we have today,” said T-Mobile Vice President of Federal Regulatory Affairs Kathleen Ham in a recent blog post.

T-Mobile is urging the commission to hold at least half of the airwaves offered in the upcoming TV Spectrum Incentive Auction in reserve for carriers “with little or no low-band spectrum” in a given market, she said. Ham noted as well that AT&T and Verizon “hold nearly three-quarters of all wireless low-band spectrum in the United States.”

AT&T is buying up local licenses to fill in the gaps in its national coverage, according to a source familiar with the 700 MHz auction.

“AT&T, it bought a large number of 700 MHz B block licenses in the auction, but since the license sizes were small, it wasn’t able to get a truly national footprint. So, since the auction, it has been trying to buy up all of the rest of the B block licenses on the secondary market so it can put it together with its 700 MHz lower C block licenses to have a good, national LTE footprint,” he said.

Indeed, the Kaplan licenses would give AT&T 24 MHz of contiguous, paired 700 MHz spectrum in the two Louisiana markets, “allowing for a 10x10 MHz LTE deployment,” AT&T said in its application, filed Sept. 30.

The commission noted that the Kaplan transfer would give AT&T 125 to 165 MHz of low-band spectrum the two CMAs. Any proposed transaction giving one carrier control of more than a third of sub-1 GHz cellular spectrum in a CMA is considered an “enhanced factor” in the FCC’s evaluation process.

“We will apply particular focus to our review of this factor as we evaluate the likelihood of potential competitive harms,” the commission said in its May 15, 2014 “Mobile Spectrum Holdings Report and Order.”

More than 100 MHz of TV spectrum was sold to wireless carriers in the 2008 700 MHz auction. Unlike broadcasters, wireless carriers are not required to build out facilities within a three-year window when they acquire spectrum.

“There are build-out rules for auction winners, although each band has different ones,” said the aforementioned source. “The AWS-1 auction, for example, only had a ‘substantial service’ requirement within 15 years. No one knows what that means. That is why the cable companies could just sit on that spectrum after winning it before flipping it to Verizon Wireless.”

“Other bands, like the 700 MHz band, are a bit more stringent, setting out five- and 10-year benchmarks that are more specific about how much area they must cover. That being said, many speculators buy the licenses only to wait a few years and flip them. And historically, the FCC has been extremely lax enforcing its build-out conditions.”

TV Technology has previously attempted to obtain wireless spectrum build-out information from the FCC, but has been told it is not readily available.

One indication of the interest in 700 MHz spectrum (see the article on the upcoming FCC auction) is AT&T’s purchase of 700 MHz spectrum from Aloha Partners capable of covering 196 million people for a price of approximately $2.5 billion in cash.

If you were wondering what winners in the FCC's 700 MHz auction were planning to do with their spectrum, a press release from Airspan Networks Inc. provides some clues. Airspan announced it has sold its WipLL 700 MHz broadband wireless access systems to Green Hills Telephone, Blue Valley Telephone, S&T Telephone, C

The FCC announced the completion of Auction No. 49 for 256 licenses in the 710-716/740-746 MHz (Block C) and 716-722 MHz (Block D) bands. Thirty-five bidders won a total of 251 licenses. Two broadcasters were winners in the auctions for the frequencies, which are now used for TV channels 54, 55 and 59. Broadcast stati

It will be interesting to see how much Verizon receives for the A and B block 700 MHz spectrum. The values could provide an indication of future interest in bidding on voluntarily surrendered UHF TV channels.